Post: FERC approves PJM request to delay Base Residual Auction

FERC approves PJM request to delay Base Residual Auction

Federal regulators have approved a request to delay the 2026-27 Base Residual Auction (BRA) by approximately six months from December 2024 to June 2025.  

PJM’s capacity market ensures long-term reliability and stability of the grid by ensuring the appropriate amount of power supply resources (including demand response DR) to meet predicted energy demand. It enables organizations in the PJM region to turn energy from a cost center to a revenue and hedging strategy.

The latest BRA saw a dramatic increase in costs for securing resources to meet the reliability requirements for the 2025-26 Delivery Year. The auction produced a price of $269.92/MW for 2025-26 for much of the PJM footprint, compared to $28.92/MW for the 2024-25 auction. This means the auction’s total cost to consumers jumped to $14.7B compared to $2.2B in the last auction. This increase underscores the evolving challenges in maintaining grid reliability and highlights the substantial financial shifts occurring within the energy sector.

PJM said that “significant market uncertainty” would make it difficult to hold its planned auction in December and that the six month delay would enable it to address concerns that the market is designed to create perceived power shortages, and drive up prices.

PJM plans to submit a separate Section 205 filing to FERC to address resource adequacy issues related to capacity market rules.

The proposed adjustments are expected to be approved and implemented before mid-2025, when PJM seeks to conduct the auction for the 2026-27 Delivery Year.

The scope of proposed changes focuses on three areas:

• seeking to keep the combustion turbine resource as the reference technology used for the calculation of the Cost of New Entry, rather than change to a combined-cycle gas-power resource, as the current Tariff would require
• addressing concerns raised regarding very low or zero value Non-Performance Charge Rates in some areas of the PJM footprint and not others
• addressing availability of Reliability Must-Run resources to contribute to resource adequacy needs

The higher prices in the latest capacity auction and the delay for the next auction make now a perfect time to consider participating in new value streams. You can leverage your site’s existing flexibility to generate more DR revenue by participating in the capacity market in addition to other programs or you can utilize advanced forecasting to predict capacity peaks and make bill savings by lowing your capacity tag.

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PJM BRA Results 2024 – White Paper

An annual power market auction by PJM resulted in prices more than 10x higher than last year as supply dwindled and demand increased. With our platform, GridBeyond can predict all 5 of the capacity peaks or bring companies into the capacity market to be an asset to the grid and earn through the program.

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